MADRID (AP) — Spanish markets failed to benefit from any improved sentiment generated by a victory for pro-bailout parties in Greece Monday as its stock markets fell and its borrowing costs increased to dangerously high levels.
About hour into Monday morning's trading session saw the Ibex-35 stock index down about 1 per cent on Friday's close. It had opened about 1.5 percent higher.
The interest rate Spanish 10-year bonds — a benchmark of market confidence in a country's ability to pay down its debt — was first down nearly 7 basis points at 6.86 percent but has since risen and was at 6.94 percent, up seven basis points for the day.
That is dangerously close to the 7 percent rate considered by market watchers to be unsustainable over the long term and the point at which Greece, Ireland and Portugal sought a bailout.
Spain is a focus of fears it might be the next eurozone country to need a full bailout. The government is to announce this week how much of a €100 billion fund it will tap to rescue banks that got burned when a real estate bubble popped.